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Global Real Estate Investments

Written By Brian Hicks

Posted March 25, 2008

Publisher’s Note:

The Standard & Poor’s/Case-Shiller Index is an index that tracks the prices of single-family homes in 10 major metropolitan areas in the U.S.

Today the index reported that home prices in January dropped by its largest margin in 20 years.

You can’t read a newspaper or listen to CNBC these days without hearing the constant drone of doom in the housing markets.

However, there’s a group of real estate investors that are making a killing.

Lief Simon of Global Real Estate Ventures is not only a long-time friend of mine, he is one of the best international real estate investors I know.

I’ve asked Lief to tell you where the opportunities are in global real estate.

Good investing,

Brian Hicks

Global Real Estate Investments: Three Ways to Play the Path of Progress Right Now

By Lief Simon

Positioning yourself ahead of the Path of Progress is the surest way I know to capture real estate profits around the world.

Right now, this strategy leads you to three real estate investment opportunities in particular. At least two of them are nowhere on the radar of the average real estate investor…which is part of the reason the potential upsides are big.

When I talk about the "Path of Progress," I’m referring to new or expanded infrastructure…new roads, paved roads, new air routes, new airports, new train service, for example…a new or a growing middle class, the expansion of the number of households, a growing retiree population…

These mega-market events lead to mega-opportunity…if you identify them in time.


This kind of mega-market movement is playing out, as I write, in Romania, for example, thanks to a half-century of pent-up opportunity and demand.

Romania is a big, strategically located Central European country that makes big sense right now for big, central production. Its port on the Black Sea gives access to the East and the Middle East. As a result, the country is attracting lots of companies looking for a base in Central/Eastern Europe. They recognize Romania’s geographic position is a definite advantage.

This foreign investment attention and the accompanying influx of new businesses, along with the fast-building momentum in-country for the free-market way of life, starting from a very low base, are leading to a rapid expansion in both the number of households and the middle class-two big Path of Progress indicators.

In other words, not only are there more people to buy houses, period…but, in addition, Romania’s new middle class wants new, bigger, and better places to live. They’re no longer interested in living in small apartments carved out of big apartments or houses in Bucharest, for example. They want new-built, spacious, and comfortable.

The current construction boom in the capital will continue for at least another three to five years. No question, this country is dead-bang in the Path of Progress. How can you benefit?

Here’s the play: Buy a pre-construction apartment. You could leverage your purchase with staged payments during construction…then either hold on, after your unit is delivered, to enjoy both rental yield and capital appreciation…or, easier, simply flip the place before it’s completed. This way you don’t even have to come up with payment in full.

More than 70 developments are making pre-construction offers in Bucharest right now. Don’t be intimidated. Even this surge in supply won’t meet the demand. You could buy into almost any one of these 70 projects and look to double your money at least.


More familiar to you than Romania may be Panama. This little country at the hub of the Americas has been enjoying serious boom times. In Panama City, and elsewhere, prices are up three, four, five times and more in the last half-dozen years.

Five years ago, I told investors to buy pre-construction in the capital. That’s not the play today. As I write, developers are asking as much as $3,500 a square meter for new construction in Panama City. Don’t pay it.

But don’t overlook the current opportunity in this country, either.

Panama has legs to carry it onward, market downturns in the U.S. notwithstanding. Right now, you want to be invested in markets that aren’t dependent on American buyers. Panama is one of them. Its Canal Expansion Project, launched in 2007, guarantees this country another decade at least of extraordinary growth. Panama’s economy grew by more than 8% in 2007, and it’s expected to grow by that much again this year, making it the fastest-growing country in the region.

While other countries in this part of the world are feeling the pain of fewer American buyers, in Panama, the party continues, largely unaffected, thanks to the big and growing numbers of Latino buyers, especially, increasingly, from Venezuela and Colombia. Panama is also attracting more attention from across the Atlantic. Buyers with euro and pounds sterling to spend right now see it as the bargain of the decade.

When you look to this country for current opportunities, recognize that the Path of Progress has moved from Panama City…beyond its nearby beaches (also over-priced)…and is fast headed west…to the country’s Azuero Peninsula.

This is both a general Path of Progress event (Panama’s number-one commodity, its beachfront, is over-priced near Panama City, so the market is moving on)…and a specific one.

For the Panama government is talking about building a new airport in the interior of the country to allow easier access to the country’s beach areas beyond the capital. Nothing is guaranteed right now, but, should this new inland international airport be built, transit time to certain of the country’s prime beach spots will be reduced by two hours and more.

That’s a big deal.

One primo beach spot set to benefit is the Azuero Peninsula. The east coast of this triangle has been on the radar of foreign investors and buyers for the past few years…and prices are on the move. The real play is on the west coast, where you’re front-running the infrastructure and can still buy (undeveloped) sandy coast for as little as $10 per square meter.

Values here are beginning to move up and will continue in this direction, building momentum, for the next half-dozen years and beyond. You’ve still got time, though, to get in early and position yourself for returns of 300% and more.


On the little island of Boracay in the Philippines, another mega-market movement is taking place, this one mostly invisible to the average American investor. Boracay, unheard-of in the West, is becoming the "in" sunspot for Asian sun-seekers.

We Americans aren’t the only ones who like the beach. Asians, too, head to the sand and the sun when it’s time for vacation, and, increasingly, the sun and sand many of them seek is on the island of Boracay.

Resorts, golf courses, and hotels are going up fast. Yes, prices are moving up, too, but it’s early days still.

This means two things. First, you can still buy in for as little as $100,000 (for that, a fully furnished resort rental apartment with rental management support).

In addition, the current market timing means rental yields are high…as much as 12% net per year. If you have any experience with rentals, you may be thinking that this sounds too good to be true.

In most markets, you’d be right. I’ve had experience with rentals in a dozen countries. Typically, you’re doing well to net 6% a year or better.

However, in the early stages of a market, you can get better-than-normal rental returns. In this case, in Boracay, right now, you can get double what you might normally expect.

This won’t last, of course. A couple of years ago, a similar situation existed in Punta del Este, Uruguay. Fellow investors were able to net 12% a year and better from rentals in that Gold Coast resort town. But no longer. The market has caught up.

Which is to say, real estate prices have risen to the point where rental yields, as a percentage, are more in line with the norm.

The market in Boracay will mature in the same way…but I believe it will be another couple of years, at least, before prices catch up to rents. Meantime, investing in an apartment in a vacation resort on this island positions you for both impressive rental yields and serious capital gains.

Good investing,


P.S. I’ve identified 13 property markets worldwide that are poised right now for dramatic growth in 2008, 2009, 2010, and beyond.

I’ve prepared a free report that describes in detail how to take advantage of these opportunities: